How to prevent a self-fulfilling prophecy
Bloomberg reported that RH (formerly known as Restoration Hardware, a California-based furniture retailer), opened its 19th store, a 9,000 sqm RH Gallery in New York. The project took five years to complete at a cost of $50 million. RH's CEO says that the location will produce $100 million pa. The CEO opposes the notion that physical retailing is dying due to e-commerce, and he has no interest in the “follow the herd” mentality that focuses on online while allowing retail and catalogue arms to wither. “There’s been a lack of capital allocation and investment into physical retailing,” he said to Bloomberg. “It’s just rotted and died. Anything that you don’t invest in will atrophy.” We think that his comments have merit – retailers who spend money on e-commerce to the detriment to their core operations tend to suffer the consequences.